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August 8, 2014

Bank of America, Justice near $17B settlement

“WASHINGTON — The Department of Justice and Bank of America have reached a record settlement in principle in which the bank will pay just under $17 billion to resolve allegations related to fraudulent marketing of mortgage-backed securities that helped cause the nation’s economic crisis, an official with knowledge of the negotiations said Wednesday.

“The tentative deal, reached July 30 during a night telephone conversation between Attorney General Eric Holder and Brian Moynihan, CEO of the nation’s second-largest bank, surpasses a similar $13 billion settlement with JPMorgan Chase last November, said the official, who is not authorized to comment publicly.

“Last week’s telephone call, the official said, came as Justice officials in New Jersey prepared to file a complaint against Merrill Lynch, a unit that Bank of America acquired during the financial crisis. The official said the bank then requested the call with Holder, and subsequently raised its payment offer to reach a tentative settlement.”

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“Financial watchdogs and others who questioned past settlements among major banks and the Department of Justice questioned whether the tentative settlement would represent a sufficient penalty.”

“The DOJ can be counted on to brag that the settlement dollar amount with Bank of America sets yet another record and claim, again, that this shows DOJ is tough on Wall Street,” said Dennis Kelleher, president and CEO of Better Markets, a financial watchdog group. “But, unlike other recent settlements, will DOJ provide the public with the key information on investor losses, Bank of America profits, the names of involved executives, specific laws broken and the actual systemic illegal schemes and activities?”

Read the full USA Today article by Kevin Johnson and Kevin McCoy here

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